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Preparing for a merger or acquisition

On Behalf of | Sep 6, 2019 | Business Transactions |

There may come a time when you need to consider agreeing to an acquisition or merger of your California business. When you are participating in a merger or acquisition as a seller, there are numerous aspects you need to consider before agreeing to a deal. At Cadden & Fuller, we understand the complex legal, financial and intellectual property issues that often accompany these types of business transactions.

Forbes indicates that some of the essential business factors to consider when preparing for an acquisition or merger relate to valuation, due diligence and intellectual property. For example, you may not have to accept a buyer’s initial offering; you may be able to negotiate. Your company’s industry, projected growth and share price may all affect the valuation. A potential buyer may request a large amount of financial documentation, including annual and/or quarterly statements, budget documents, investment information and lien paperwork.

Another aspect you may need to prepare for is a lengthy due diligence process. A potential buyer may need a significant amount of time to research your company’s assets, liabilities and contractual obligations. A buyer may also attempt to determine your company’s potential risks, such as unsigned nondisclosure agreements or ongoing intellectual property disputes. Some common IP issues involve the technology used in business operations, especially if in-house personnel developed it. There may be additional complications if your company’s operational technology incorporates open-source software. You may need to provide detailed documentation on existing licensing provisions and any IP litigation involving your business.

Comprehensive preparation for an acquisition or merger may help the transaction go smoothly. Some common steps include addressing intellectual property issues and gathering financial documentation. More information about this topic is available on our web page.